Hello! I've just attended a webinar titled, "Innovative In-Vehicle Electronics with IBM's Rational Software Platform" which discussed innovative electronics for current and future automobiles. Sponsored by Automotive News and IBM, the presentation focused on the ideas that our cars are instrumented, interconnected and intelligent. There has been a huge increase in electronics and embedded software during the past several years. Did you know there was only one computer onboard a vehicle in 1977 and now there is an average of 30 computers?
Cars are getting smarter every day. Current electronics are being expanded to include emergency services (e.g., GPS and diagnostics), entertainment (e.g., surround sound systems, video and PC's), intelligent navigation, driver assistance and safety alarms.
These systems make the car safer, more enjoyable and flexible, but there is a downside. Hackers can infiltrate any electronic control unit (ECU) and create unsafe conditions. The ease of how hackers can infiltrate an ECU can be a cause for alarm. But manufacturers are creating newer software that will be encrypted for security reasons.
In the meantime, IBM has developed a rational software platform for automotive systems. It uses best practices, collaboration, scalable, open standards and integration.
The future of automotive electronics is nearly unlimited and will provide room for a loads of innovation. Stay tuned. Posted by Sam Okimoto, Account Representative, Automotive Aftermarket Team, Polk (06.11.2010)
I want to extend my personal congratulations to Tenneco, Inc., winner of the 2010 Polk Inventory Efficiency Award. The Polk Inventory Efficiency Award recognizes and rewards outstanding automotive aftermarket companies for process improvements relative to inventory efficiency. This year’s award was presented at the recent Global Automotive Aftermarket Symposium (GAAS).
Tenneco, headquartered in Lake Forest, Illinois, was honored for the development and implementation of INVision™, its Inventory Analysis and Optimization Solution. Tenneco was able to automate the stock adjustment process by utilizing sales intelligence and developing a much more efficient process for responding to lost sales opportunities and recapturing sales.
For those who weren't able to attend GAAS this year, here is a video showing some of the previous Polk Inventory Efficiency Award recipients followed by Tenneco's achievement. I hope you enjoy it.
Posted by Stephen Polk, Chairman/CEO, Polk (06.01.2010)
In a recent interview about how scrappage and other vehicle trends are affecting the independent aftermarket and dealer service marketing, I was asked "What is the new normal?" Well, of course working for Polk, I instantly talked about the new "normal" as being new vehicle sales in the neighborhood of 11 to 13-million per year. And how the normal is not the 15 to 16 million units that the industry thought it was as recently as two years ago.
However, recently at the Global Automotive Aftermarket Symposium (GAAS), I started to question what the new normal really means. I'm considered one of the young guns that is supposed to be tech saavy and in touch with my social media side; however, I still have an "old" way of thinking. I immediately started thinking about how average vehicle ownership length has increased by 21% over the past 9 years, how the average vehicle age at 10.2 years is now higher than it ever was before, how vehicle warranty is increasing and favors the dealers, and many more traditional metrics. Is this the old way of thinking? Should we also be thinking about how the consumer demographic is changing and decisions are being made through social media? How do we incorporate the new way of thinking into our every day operations and make it work for businesses and the consumer? Should we think more about how to get to the Facebook generation (everyone under the age of 65) and talk to them about underperformed maintenance and how it affects their vehicle life, stability and costs?
I think the new normal is not that normal at all, and that we all need to change our focus. Yes, the key indicators will always be there, but we probably need to create new "key" indicators. At GAAS we heard about the new generation of customers and how they are integrated into the "NOW" world more effectively than in any other time in the past. We learned that they are loyal, smart consumers until a product fails or another promises greater functionality. Then they hightail it to the next brand, and leave a trail of comments, status updates and tweets in their path. As an industry, we can capitalize on it. We have the resources to educate our consumers through tools like YouTube. We can contact them proactively about maintaining their cars properly and cost effectively. Knowing the leading indicators such as scrappage, new vehicles sales, length of ownership and average vehicle age is just scratching the surface of being able to plan and be successful in the aftermarket. Maybe it's time to start focusing on the new normal as well.
Posted by Bryan Funke, Director, Sales & Client Services, Aftermarket & Commercial Vehicle Teams, Polk
Here are several highlights from the second and final day of the Global Automotive Aftermarket Symposium (GAAS).
John Watt of Petro-Canada provided an interesting insight into why aftermarket service providers leave billions of unperformed maintenance on the table. It seems there is a lot of unsold business that can be corrected with just scheduling appointments regularly and consistently.
A Shop Owner Panel followed and was moderated by Bill Haas, Vice President – Educational and Training, ASA. This panel provided an informative look at how connecting a driver with their vehicle, other vehicles and the roadside infrastructure will impact aftermarket companies.
Jeff Henning of Ernst & Young discussed the impact of the OEMs on the aftermarket. It seems car dealers will look at doing more business in the aftermarket because of profitability concerns and lack of warranty work.
Tony Cristello of BB&T Capital Markets provided a detailed look at the economy and the aftermarket. He commented on the strength of the aftermarket and how the aftermarket stocks outperformed the general stock market. The economy is still in recovery mode and the forecast is optimistic for the aftermarket.
The symposium ended on a highly positive note with a call to action from the leadership group. They felt that we need to be represented with a "grass roots" campaign to contact legislators to make sure our industry is well represented.
This year's GAAS event was truly outstanding. Thanks to everyone who stopped by the Polk booth this year. It was a pleasure seeing you! Posted by Sam Okimoto, Account Representative, Aftermarket Team, Polk (05.20.2010)
This year's Global Automotive Aftermarket Symposium (GAAS) has started off strongly with speakers discussing a variety of topics including the economy, automotive repair chain growth, the Chinese aftermarket and how to grow your business.
The highlight of the first day was the presentation of the Polk Inventory Efficiency Award which was won by Tenneco, Inc. They developed a system of managing inventory for their distribution centers, WD's, Jobbers and sales personnel. The system works extremely well across all levels of the supply chain and has significantly increased customer satisfaction for Tenneco.
Later, a presentation detailed the Generation Y shift away from cars. Also included was an interesting discussion of the social media and mobile technology. Additional topics included succeeding through innovation, and innovations in branding and marketing.
The first day ended with a networking reception hosted by the AAIA and Ernst & Young.
It has been a great start to a wonderful industry event. I'll keep you posted about Day #2 activities very soon.
Posted by Sam Okimoto, Account Representative, Aftermarket Team, Polk (05.19.2010)
Be sure to join us at the upcoming Global Automotive Aftermarket Symposium (GAAS) which will be held on May 18-19, 2010 at the Hyatt Regency in Rosemont near the O'Hare Airport. Close to 400 senior managers, executives and others from the automotive aftermarket will be in attendance including retailers/wholesalers such as AutoZone, NAPA, Federated, Pepboys, Uni-Select, and Carquest.
The event has a full agenda of speakers and panels to discuss current topics in the automotive aftermarket. Subjects range from the repair industry trends, Chinese aftermarket, Generation Y thoughts, marketing, OEM impact and commentary on the economy and the aftermarket.
Don't miss the Polk Inventory Efficiency Award ceremony, which will be held on Tuesday afternoon beginning at 1:30 p.m. This is an award given to a manufacturer and/or retailer that has demonstrated process improvement related to improvements in inventory efficiency.
By the way - the proceeds from the event are used for scholarships for aftermarket studies. In 2009, a total of 75 students – 68 in the United States and 7 in Canada – were awarded scholarships by the GAAS scholarship fund and its contributors. In its 14-year history, the fund has presented more than $1.4 million in awards to more than 1,400 students.
Hope to see you there. Posted by Sam Okimoto, Account Representative, Aftermarket Team, Polk (05.17.2010)
I did a brief interview for a public radio program last week and they asked me about people and their ownership patterns of cars and trucks. Specifically, they wanted to know if people were hanging onto their wheels longer and why. Short answer: "Yes."
Americans Continue to Hold Onto Vehicles Longer
The trend we've seen over the last 8 years is pretty stark. As new and used vehicle sales in the U.S. have taken a hit in recent years, the chances that we'll hold onto our vehicle for longer periods of time has definitely risen. In late 2001, the average number of months we Americans held onto a new car or truck was 47.5 months. As of September 2009, it was over 60 months. Same pattern, but at different levels, apply for used vehicles, too. Why? How?
The economy helped this, but it's not the only reason. I won't elaborate on the old news of what a recession does to individual spending in the auto market. But that's not the only contributor motivating you and I to hold onto our vehicles longer.
Financing. Leasing options were more difficult to come by in 2009, particularly as Chrysler Finance and GMAC withdrew from this type of activity. That hurts the "churn" of someone being able to move from a temporary owned vehicle into another one. Plus, there are more deals out there where you can finance for longer term lengths. You've heard of 72 month car loans? They're growing. That'll add to the average ownership length. I found an article from LendingTree dated 2007 citing the beginning of this pattern.
Warranties and extended warranties. Automakers are covering their powertrains for longer periods of time and bumper to bumper warranties are also growing. Go talk to a dealer and they'll be happy to sell you an extended warranty as well. Add another factor to my motivation to hang on to 'ol Betsy.
Vehicle durability is rising. While perceived durability and reliability may be an issue for some brands, consumer research shows that more and more brands are on par with one another regarding their overall product quality ratings. That is a systematic factor allowing you and I to deal with the same set of wheels for a longer period of time.
The trend bodes well for the automotive aftermarket. (Repair business is good - have you checked out AutoZone's stock lately?) It does suppress the annual sales rate for new sales, but if you are a franchised dealer, can you think of a better reason to have for building a customer retention game plan for your service business? I can't.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk
In a previous blog I asked the question, "What will be the buzz at NADA 2010?" Now that the show is over, I have some observations to share.
NADA 2010 was a combination of "sizzle and steak." The show included new technologies, and beautiful vehicle models. There were brick and mortar enhancements for dealers to compete on a retail level. Aftermarket Row provided ways to ramp up fixed operations and used vehicle sales for gaining the dealership "orphaned owners."
The atmosphere was more intimate, featuring a smaller and scaled back exhibit hall. Speaking with attendees and exhibitors, the more personal access and "to-the-point" conversations was a refreshing change from the bloated, party-filled NADAs of the past. The market continues to figure out the digital purchase journey of shoppers to buyers. Dealers and their agencies are working to be more effective at spending automotive marketing and advertising money for better shopper and lead conversion. The magic behind the curtain of behavioral targeting is becoming less of a mystery. And we're all starting to connect the dots of offline and online (digital marketing) activity to help suppliers and dealers figure out ad placement and content when delivering a marketing message that is based on consumer needs.
Overall, the integration of data into dealership portals and dashboards is accelerating and is finally beginning to show that all of this information can be placed into a singular business intelligence tool for making better data-driven decisions.
So, I’ll join the rest of the attendees I’ve spoken with, who enjoyed a new, and different NADA and say that 2010 will be another challenging year. Those that were here will come back with the tools and knowledge to take advantage of a slow, but progressively improving vehicle sales year in 2010.
Posted by Brad Korner, Director - Client Sales & Service, Automotive Retail Solutions, Polk (02.18.2010)
Last week I attended the AAIA Car Care Council—Women’s Board 2010 Winter Meeting at the Rio Hotel & Casino in Las Vegas. I was also honored to participate in a Hybrid Technology Panel to discuss the future of hybrid vehicles and how they will affect the automotive aftermarket industry.
Through the discussion, it became very clear that while hybrids are talked about a lot, they are still very, very young. As of July 1, 2009, hybrids represented less than 1% of the vehicles in operation. However, while currently not that significant, it is clearly viewed as the technology of the future. And, new technologies bring new challenges and that means new opportunities for the aftermarket.
The training available for technicians at this time is still very limited to only maintenance work and since these vehicles are still so new, it is too soon to determine what types of service issues they may be prone to.
All in all, the aftermarket needs to keep an eye on this small, but growing segment. Hybrids don’t appear to be going away, so we need to embrace and prepare for a very promising future.
Posted by Heidy Herrera, Account Representative, Aftermarket, Polk (01.26.10)
So there I was, sitting in my car at a local quick lube establishment, trying to stay awake, when I remembered I needed new wiper blades. I asked the attendant, who checked his stock and sadly told me he did not have blades that would fit my car. WHAT? How could that be? Sure my car is 12 years old...and a model that is no longer being built...by a brand that no longer exists. I still have the car and I still need to maintain it. I need this car, because I’m about to pass it down to my son as his first car. But I digress.
So why didn’t this oil change place have my wiper blades? They should know that there is a 12-year old Geo Prism in the area. It's basic parts and service etiquette! As a Polk employee I was curious to see what our vehicle population database said. So I did some research and there are 1,178 '97 Geo Prisms in the Detroit DMA. And nobody has a wiper blade for them?
But, maybe I'm being too harsh. The idea of stocking up for one specific vehicle is probably unreasonable, especially with all of the automotive industry challenges the aftermarket is currently facing. Yet, inventory efficiency is critical for automotive aftermarket companies. I know because I’ve been very fortunate to have met several companies that have implemented exceptional inventory management systems. These are the winners of Polk's Inventory Efficiency Award. How good are they? Check out their award-winning projects at: http://usa.polk.com/Industries/AfterMkt/videos.htm.
Want a deeper dive? Check out this case study about Uni-Select, a large automotive parts distributor who worked with Polk to develop an e-modeling tool to save their customers time and money. I think you will be impressed.
And hopefully the next time you need a car part—it will be in stock!
Posted by Jeffrey Stone, Senior Marketing Specialist, Polk (11.12.2009)
This has been a difficult year with many automotive industry challenges; consequently, marketing budgets have been cut significantly. I attended EquipAuto 2009 for the fifth time as a visitor, and the second time as an exhibitor. I must say that the show left me with a funny feeling.
Despite rumors of cancellation, the exhibition took place from the 13th to the 18th of October in the North of Paris. The limited number of exhibitors meant that the surface was reduced from six to two halls. I was even more surprised to discover that these two halls were not full. Last minute budget shortages left so many holes, it was like navigating your way through a piece of Swiss cheese. It really was unusual to have such a low turnout of exhibitors, yet the increased visibility worked to our advantage. The attendants could spend time on stands, discussing the technologies and the innovations.
The event included the traditional tooling, servicing and hardware exhibitors showing usual products supported by new sales concepts -- those mainly acting in the independent aftermarket. I've noticed the growing importance of computers in the traditional parts & service industry. The image of the greasy mechanic dressed in blue is quickly being replaced by a clean consultant, checking databases and launching programs to give you the expected answers and service for your car.
I noticed something else different – it seems the first steps are being taken to follow the path required by the many new regulations for environmentally-friendly cars. After years of heavy cars and big engines, we are living through a major change to more efficient, lighter, and safer cars. And to support that, parts and service suppliers brought new things to the table -- new technologies that go along with drastic reductions of carbon emissions. I’m talking about the growing number of dry cleaning solutions, the LED suppliers, the catalytic converters fabricants, etc. Innovations are following the evolution of cars. The more than necessary reaction and adaptation to change within the industry is finally here. It is costly, but the adaptation to the upcoming cars is necessary, especially since the scrappage premiums and the CO2 regulations in Europe are accelerating the phenomenon. Although, the crisis been difficult on the industry, the creativity and innovation remain!
Posted by Bertrand Rakoto, Analyst for Marketing and Consulting, Polk (11.11.2009)
Join me and my colleagues from Polk on November 3rd-5th at AAPEX 2009, located in the Sands Expo Center at the Venetian Hotel in Las Vegas, NV. On November 3rd, Uwe Biastoch and I will present: "The New Global Automotive Outlook—What Will the Recovery in Global Volumes Mean to You?"
The global automotive aftermarket industry is at a crossroads. Challenges of the global economy, reductions in global vehicle demand, the contrast between saturated and emerging vehicle markets, changes to the automotive manufacturing landscape, and new players looking to dominate the global stage... what does all this mean to you? Come hear how the ever-changing global automotive forecast is expected to change our industry in the years to come.
You’ll learn about:
The economic outlook of the U.S., Europe and Asia
How new vehicle registrations, production and the global vehicle population are expected to change in the coming years
How the global aftermarket may evolve in years to come
Meanwhile, Polk will be displaying its data-driven solutions for the global Automotive Aftermarket & Commercial Vehicle industries at the 2009 Automotive Aftermarket Products Expo (AAPEX). Stop by Polk Booth #838, to learn how Polk can help you address some of your toughest business challenges:
Information Process Management
Inventory Management
Forecasting
Global Vehicle Volume Analysis
Target Marketing
VIN Decoding
Recall Campaigns
Commercial Aftermarket Demand
Fleet Profiling
And More
Click here for more information or to register. We’re looking forward to seeing you there!
Posted by Dave Goebel, North American Forecast Consultant, Polk (10.19.2009)
Listen-up independent repair facilities! Pontiac, Saturn, Hummer and Oldsmobile brands alone represent 15.2 million vehicles on America's roads today. Combined with the closing of many OEM locations and the consolidation of their networks to meet vehicle sales projections, you should now ask yourself, "Who's going to service and sell parts for all of these vehicles?" There is no question that consumers are keeping their cars for a longer period of time, prompting a greater need to pay for parts and service.
I don't know too many people who enjoy reveling in the misery or demise of others. I do know how to recognize an opportunity when I see one, though. It's like this time when I was a junior in high school and the kid in front of me on the basketball team went down with an injury. I got my shot, added value to the team and earned some playing time. Did I enjoy seeing him in pain or losing minutes on the floor just because he got hurt? No, but I did relish the chance and take advantage of the opportunity that was presented me.
There is a bittersweet opportunity available to the automotive aftermarket in the near future. For independent repair facilities, there may be an even greater opportunity because studies suggest there are exorbitant differences in parts and labor costs between franchise dealers and independent repair facilities. This is just the type of play that could keep independent repair facilities ahead of the game.
I heard much lament over Cash for Clunkers stealing some of the volume from the automotive aftermarket. Although those concerns are valid, the future is looking brighter. Even though I don't see fireworks and hotdogs on the horizon, I still feel confident calling it "Independents Day".
Posted by Therran Oliphant, Account Representative, Polk (10.09.2009)
We’re seeing a definite change in the automotive industry. One of the most significant industry trends I’ve noticed recently is the shift toward used vehicles. Pre-owned cars and trucks have always been more popular than new ones, but with a weak U.S. economy, it’s evident that consumers are veering (even more) towards buying used versus new vehicles.
As everyone in the industry knows, sales trends are down. A look at Polk registration data shows a decline of 35% from last year for new vehicles, while used sales are down just a mere 5%. Yet the ratio of used-to-new vehicle sales (a key industry metric) is growing steadily, quarter over quarter. In fact, in just the past year, we’ve seen the ratio of used-to-new vehicle sales decline two points from 3:1 in Q1 2008 to 5:1 in Q1 2009.
Polk recently released a 'Polk View' on this topic, titled "More Consumers Choose Used Vehicles in Weak Economy". It’s very interesting to see where the automotive sales trends are going, what markets have been impacted, and which brands are thriving in the used market. Interestingly, yet not surprisingly, the used-to-new sales ratio for domestic brands increased over last year. In 2008, five used vehicles sold for every new domestic vehicle sold. In the first quarter of 2009, eight used vehicles sold for every new domestic vehicle sold. This is definitely a cause for concern for the domestic OEMs.
So how do OEMs, Dealers, and Aftermarket groups deal with this market shift? What are we doing in this changing industry? What steps can we take to be proactive rather than reactive? I’d encourage you to read the Polk View for some insights on the matter… but what are your thoughts?
Posted by Tiffany Ng, PolkInsight Advisor, Polk (07.01.2009)
I am excited to be kicking off this launch of the Polk Blog. Together with many of my Polk colleagues, I welcome the chance to share thoughts and insights and to engage in dialogue on the automotive industry challenges that surround us every day.
Our goal is to share perspectives, market analysis and forecasts on the shifts we see in the global automotive marketplace. I have no doubt that the next few years will be turbulent. There will be continuous change in sales trends, lead management practices and aftermarket support that will drive loyalty to manufacturers and their dealers. Other factors like changing CAFE regulations and hybrid technology advances will influence product decisions in the industry.
And the breadth of changes will be global. I made a presentation last week on the Chinese automotive outlook. One of the highlights for me was the significance of General Motors as the leader in the Chinese light vehicle market (17.4% market share). GM had the largest largest share gains in China in 2009, succeeding despite the turmoil around the US bankruptcy issues. There will be winners and losers around the world, and the final outcomes will be very volatile.
It is going to be an exciting time. Welcome, again, to our inaugural Polk Blog. We welcome your comments as we discuss our perspectives.
Posted by Stephen Polk, Chairman/CEO, Polk (06.29.2009)
I recently had the pleasure of participating in the Automotive Customer Centricity Summit 2009, hosted by Thought Leadership Summits (TLS) in Marina del Rey, California. We heard from some of the most respected thought leaders in the industry on the topic of Customer Centricity – the evolution of automotive CRM. We witnessed how Collier Automotive Group leverages technology to improve the showroom experience. And, the aftermarket showed us how collaboration and vehicle personalization can create not only profitable customer relationships, but can drive brand loyalty by appealing to an individual's need for self-expression.
Tactical efforts to improve customer experience are important. But, I feel that the fundamental challenge in the current automotive industry is its inability to consolidate customer touch points (vehicle purchase, sales satisfaction index [SSI], Captive Finance, warranty, CSI, customer pay service) into a single customer-centric view. Without this singular view, we see customers bombarded with often conflicting messages and offers from the OEM, the Dealer and the Captive Finance source, which invariably drives down credibility and damages the overall brand experience.
More importantly, this often impersonal approach to communication contributes to the defection of retail service customers into the aftermarket as the vehicle ages.
As a result, dealerships are losing share of the aftermarket. According to the AAIA, in 2008, dealerships' share of the automotive aftermarket fell to below 30%, the 6th consecutive year of decline. This not only impacts short-term dealer profitability, but long-term repurchase consideration and loyalty.
In today's challenging economic times, dealerships and OEMs can't afford to lose loyalty or vehicle sales. Maintaining customer relationships and customer loyalty to a brand is essential to not only prosper... but to survive.
Posted by Patrick Reininger, Vice President of Sales & Client Services, Polk (06.26.2009)
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